ICRA's (NSE:ICRA) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of ICRA Limited (NSE:ICRA) has announced that it will be increasing its dividend on the 19th of August to ₹28.00. Despite this raise, the dividend yield of 0.7% is only a modest boost to shareholder returns.

See our latest analysis for ICRA

ICRA's Payment Has Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Before making this announcement, ICRA was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 20.4%. If the dividend continues on this path, the payout ratio could be 20% by next year, which we think can be pretty sustainable going forward.

ICRA Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from ₹17.00 in 2012 to the most recent annual payment of ₹28.00. This means that it has been growing its distributions at 5.1% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

ICRA Could Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. ICRA has seen EPS rising for the last five years, at 5.6% per annum. ICRA definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like ICRA's Dividend

Overall, a dividend increase is always good, and we think that ICRA is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in ICRA stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.